Special Needs Planning: 6 Things You Should Know

Many of us are aware of the importance of taking care of our own estate planning. However, when a family member has special needs, proper estate planning is even more critical.

Families of individuals with special needs face many difficult and complex issues in addition to the issues faced by typical families. Whether you are a parent, grandparent, sibling or other relative of an individual with special needs, here are a few things you should know.

1. Make sure you have the essential documents.

When planning for the future it is essential that you have all your document in order. As a general rule, we should keep our estate planning documents in a safe place, which is readily accessible in the event they are needed. For a detailed description of what documents you will need check out 10 Must-have documents for parents of children with special needs.

2. Set a goal for your planning.

Planning must assure appropriate management of finances and personal decisions in the event of disability or death of both parents, with a goal towards avoiding future problems. Parents might also need to continue making decisions for a child with special needs during adulthood, provide for future residential needs, and find someone to care for the child when they are no longer able.

3. Find care services that develop independent living skills and an appropriate education.

Unfortunately, there is no “training manual” on how to do things the right way. In fact, there probably is no one “right” way as the needs and concerns of each child with special needs are different. Nevertheless, as part of this process all parents likely need to find necessary care and services, foster the development of independent living skills, and make sure their child receives an appropriate education.

4. Maximize financial resources for present and future expenses.

This will allow the highest possible quality of life for the child and other family members. Often, this involves securing eligibility for government-financed programs and supplementing those programs with private funds.

5. Obtain help from professionals

Although there are many support groups and community services available to assist parents who have children with special needs, at some point it becomes necessary to obtain help from competent professionals.

In our experience, the best estate plans developed for families who have children with special needs arise from a team approach. In addition to the special needs planning attorney, it is critical that the family’s accountant, insurance and financial advisors be involved in the process. Of course, the family is an integral part of this process as well.

If appropriate, the individual with special needs should be included in these discussions to the extent possible. In these types of situations, it is critical for advisors to listen to the needs and concerns of the family. Only after hearing their needs and concerns, can an appropriate estate plan be designed.

6. Secure eligibility for government-financed programs

When reviewing the child’s need for governmental benefits, take care to distinguish between those that are means-tested and those that are not based on the individual’s income or assets. Means-tested benefits are reduced or denied when income or assets are above certain limits. Although there are others, the two primary means-tested benefits that will be important in most instances are Supplemental Security Income (SSI) and Medicaid. Both have strict asset and income requirements in order to qualify.

If eligible, Medicaid will cover long-term health care which can be extremely important for a child with disabilities. SSI is a Federal program which provides a monthly income supplement to meet basic needs such as food, clothing and shelter. The various programs have different rules regarding the treatment of unearned income and in-kind support from third parties. These differences often dictate the provisions that should be included in the client’s estate planning documents. The goal is to assure that the child is not disqualified from these programs by assets placed in his name.

In conclusion

Although some parents are aware of the array of legal issues they must confront, many arrive at the lawyer’s office concerned only about what will happen on their deaths and perhaps wondering about a “special needs” trust. Simply put: these are discretionary trusts drafted so that the income and assets are not counted as resources of the beneficiary with disabilities for purposes of establishing eligibility for means-tested government benefits. While special needs trusts are a critical component of an estate plan when planning for a family member with special needs, there is so much more that needs to be considered and discussed. That is why it is so important for you to work with advisors who are not only knowledgeable in their substantive field, but also who are aware of the many local and community resources available to family members with special needs.

Bernard A. Krooks, J.D., CPA, LL.M (in taxation), CELA, is a founding partner of the New York law firm Littman Krooks LLP. A nationally noted expert on special needs planning, he is past President of the Special Needs Alliance (www.specialneedsalliance.org), a national non-profit organization dedicated to assisting families with special needs planning and related issues. Mr. Krooks may be reached at (212) 490-2020 or via email at [email protected]. For other inquiries or more information on special needs planning, visit the firm’s website at www.littmankrooks.com.